Article 6 Sectoral Approach and Enabling Environment

Under the Paris Agreement, all countries are required to set NDCs to reduce their carbon emissions. At the same time Article 6 of the Paris Agreement has left the door open to international trading of emissions reductions as internationally transferred mitigation outcomes (ITMOs). While the rules associated with Article 6 have yet to be established, any international trades will need to be authorized by the selling country to avoid double counting, permitting the movement of the related emission reductions between registries, from the selling country to the buying country/entity. Transactions will take different forms, from linking of national trading emission trading schemes, project level transactions, and policy approaches. Specifically, policy approaches is a new focus, looking at how results-based finance, either through explicit or implicit pricing of carbon can bring about transformational change to long term de-carbonization pathways for national economies which can then be broken down to sectoral or multi-sectoral level via a single policy. GGGI will act as enabling partner supporting the government as and when needed. The project will take place in two phases. i.) First, a scoping phase will undertake an initial assessment at national level of policies and sectors to identify potential opportunities in GGGI Member and Partner countries. The scoping phase will reduce a long list of 8 countries (Colombia, Mexico, Peru, Vietnam, Indonesia, Morocco, Thailand, and Senegal) to a short-list of up to 4 countries for the second phase. The initial countries listed above were identified through an assessment of GGGI member and partner country’s economic size and NDC composition ii.) Second phase will further develop these policy approach potentials in up to 4 countries. Activities in the second phase will run largely in parallel.